Georgetown University Law Center

Scholarship @ GEORGETOWN LAW

2007

Why Care About the Polar Bear? Economic

Analysis of Natural Resources Law and Policy
Lisa Heinzerling
Georgetown University Law Center, heinzerl@law.georgetown.edu

This paper can be downloaded free of charge from:

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Part of the Administrative Law Commons, Environmental Law Commons, and the Natural Resources Law Commons
 Why Care About the Polar Bear?
Economic Analysis of Natural Resources Law and Policy
Forthcoming, The Evolution of Natural Resources Law and Policy (ABA 2008)

Lisa Heinzerling

Georgetown University Law Center

This paper can be downloaded free of charge from the

Social Science Research Network at:
http://ssrn.com/AbstractID=1026288
 Why Care About the Polar Bear?
Economic Analysis of Natural Resources Law and Policy

By Lisa Heinzerling*

Cost-benefit analysis is all the rage in pollution control law. So far, however, it has not

played as significant a role in the evolution of natural resources law and policy. Perhaps this is

because U.S. natural resources law has, as a whole, been characterized by quite weak standards

and even weaker implementation. To the extent that cost-benefit analysis is wheeled out, as I

believe it often is, only to defeat regulation that might otherwise be thought a good idea, it may

not have been a large feature of natural resources law only because natural resources law has not

been substantively threatening enough to prompt the deployment of this economic tool.

Whatever the reason for the relative absence of cost-benefit analysis in the field of natural

resources law, would it be a positive development if cost-benefit analysis were used more often

in this context? I will argue here that the answer is no. I will develop this argument by

considering a specific case study: how economic analysis might evaluate public policies to

protect the polar bear. I will suggest that none of the most important reasons why we might want

to protect the polar bear will be meaningfully reflected in economic analysis.

I have picked the polar bear as my example because it presents a puzzle. I do not think it

can be denied that the public cares a great deal about the fate of the polar bear. Consider the

public’s reaction to the threat to the polar bear posed by climate change. Many different factors

have combined to focus public attention on climate change, but surely one of the items at the top

of the list must be the widely circulated photos of apparently struggling, perhaps even drowning,

polar bears. More than one person has told me that the photos changed her life – inspired her to

*
Professor of Law, Georgetown University Law Center. I am grateful to Sarah Nealen for excellent research
assistance.

1
change her driving habits, her patterns of consumption, in one case even her professional

purpose. If climate change has a face, it is the white-furred, black-nosed face of a polar bear.

Yet the overwhelming majority of us will never use a polar bear or even see one outside

captivity. We will not eat its meat, wear its fur, or even travel to see it. Nor, in all likelihood,

will we make any use of the Arctic marine resources – the ringed seal on which the polar bear

feeds, the small fish and krill on which the seals feed, and so on down the ecological chain –

which depend on the polar bear for their own flourishing and even survival. Our economic

relationship with the polar bear, conventionally speaking, is nil.

There are exceptions among us, to be sure. Despite the odds against them, the Inuit of

Canada have maintained a close economic connection to the polar bear. They continue to hunt

the polar bear for subsistence purposes. They sell polar bear pelts. And they sell some of their

hunting rights to trophy hunters. These hunters pay up to $27,500 for the privilege of trying to

kill a polar bear. In addition, growing numbers of tourists are traveling to the Arctic to observe

the polar bear in its natural habitat.

Beyond these mainstream economic values lie the monetary value individuals place on

“non-uses” of the polar bear, including having the option one day to see a polar bear in the wild,

being assured that one’s descendants could make use (or non-use) of the polar bear if they

wished, and simply knowing that the polar bear exists. These sources of value have produced

exceedingly large estimates of the economic worth of species other than the polar bear. If

similar values obtained for the polar bear, the non-use values of the polar bear would, first, be

huge, and second, greatly exceed the conventional economic value of this animal.

Thus, despite the rather narrow direct economic uses of the polar bear, the polar bear has

the potential to have a gigantic monetary value. But that is assuming that non-use values are

2
taken into account, which is by no means certain given current cost-benefit practices. Equally

troubling for the polar bear’s bottom line, moreover, is that the bear does not appear to be in

imminent danger of extinction. Current research predicts that the polar bear, though doomed if

we continue business as usual, will not actually become extinct for another 50 years or so. The

way cost-benefit analysis is currently practiced, the government would calculate the benefits of

protecting the polar bear as of the time the bear would otherwise be materially harmed. If that

date lies in the future – as it appears to for the polar bear – then the government would discount

those benefits over the interval between the present and the time when the harm will occur. The

theory behind discounting is that costs and benefits that lie in the future are not as valuable as

present costs and benefits. Discounting any benefits over a period as long as 50 years,

particularly at the 7 percent rate favored by current government practice, will greatly diminish

their apparent worth.

More fundamentally, asking questions about the monetary value we place on the very

existence of the polar bear, and discounting that amount as if it were money and only money,

misses the deepest and most profound reasons why we care about the polar bear. We can obtain

very large economic values for the polar bear only by insisting that people reduce their

admiration for and worries about the animal to monetary terms, but paradoxically, by doing so

we cast aside or even denigrate the aesthetic, spiritual, and moral impulses that drive people to

report large monetary values for animals like the polar bear. Discounting the future worth of the

species as if it were money only compounds this basic mistake.

My discussion proceeds as follows. First, I will say a few words about the polar bear

itself: the animal, its habitat, and the threats it faces. Second, I will discuss the economics of the

polar bear: how to calculate how much it is worth if we use it and how to calculate how much it

3
is worth if we don’t. I will also discuss how the likely temporal remoteness of the polar bear’s

demise affects the economic value of the animal. Finally, I will explain how seeing the worth of

the polar bear in economic terms adds next to nothing to our understanding of how we value the

polar bear, while at the same time subtracting a great deal. Cost-benefit analysis, in this context,

is a way of losing information rather than generating it. As such, there is little to commend it.

I. The Polar Bear

Evolved from the brown (grizzly) bear 100,000 or more years ago,1 polar bears now

occur in 19 different populations in the Arctic.2 The estimated 20,000-25,000 living polar bears3

can be found in five countries, often called the “polar bear nations”: Canada, Greenland,

Norway, Russia, and the United States.4 The polar bear is the largest living bear species and the

largest land carnivore.5 It eats mostly ringed seals (and of these, mostly pups and their

mothers),6 but it also eats other kinds of seals and sometimes walruses, narwhal, and belugas.7

Male polar bears live about 25 years, females often a few years longer than that.8 Females begin

having cubs when they are 5-6 years old.9 Litters are small – typically two, rarely three, cubs.10

The cubs stay with their mothers until they are almost 2-1/2 years old.11 As a consequence of

their late sexual maturity, small litters, and prolonged period before weaning, polar bears have a

1
IAN STIRLING, POLAR BEARS 22 (1988).
2
Fish and Wildlife Service, Endangered and Threatened Wildlife and Plants; 12-Month Petition Finding and
Proposed Rule to List the Polar Bear (Ursus maritimus) as Threatened Throughout Its Range, 72 Fed. Reg. 1068,
1068 (Jan. 9, 2007) (“Listing Proposal”).
3
Listing Proposal at 1068.
4
Listing Proposal at 1066.
5
Stirling at 23.
6
Stirling at 120.
7
Stirling at 134-135.
8
Stirling at 139.
9
Stirling at 89-90.
10
Stirling at 84.
11
Stirling at 81.

4
very low reproductive rate.12 The polar bear is regarded as a keystone species in its Arctic

ecosystem, one that has a large influence on the ecological community in which it lives.13

Polar bears live most or all of their lives on the Arctic sea ice; this is, indeed, why they

are considered marine mammals. 14 Many of the polar bear’s physical characteristics – from its

water-repellant guard hairs to its paddle-like feet – are adaptations to the animal’s life on the

ice.15 Polar bears are frequently on the move to adjust to moving sea ice; the movement of sea

ice affects the distribution of the seal population on which they depend.16 In the areas where sea

ice melts during the summer, the bears come ashore until the sea freezes over again.17 Female

bears use their land habitat for digging their dens.18 While on land, the bears typically live off

their fat reserves, sometimes going as long as eight months without food.19

Polar bears are, in short, utterly dependent on sea ice. They hunt from there, rest there,

and mate there.20 They use it as a surface for moving from place to place, including to their

denning areas. 21 As land is to humans and water is to fish, the sea ice is to the polar bear.

It should come as little surprise, therefore, that the changes in sea ice conditions due to

climate change, both those already observed and those predicted for the future, are expected to

take a terrible toll on the polar bear. Since 1978, scientists have reported a decline of 7.7 percent

per decade in late summer Arctic sea ice and a decline of 9.8 percent per decade in perennial sea

ice.22 It appears that the rate of decline has accelerated in recent years. The loss of sea ice has

12
Stirling at 142.
13
I. Stirling & A.E. Derocher, Possible impacts of climatic warming on polar bears, 46 ARCTIC 240 (1993).
14
Listing Proposal at 1065.
15
Stirlingat 24.
16
Stirling at 61.
17
Stirling at 159.
18
Stirling at 64-65.
19
Stirling at 146.
20
Listing Proposal at 1067.
21
Stirling at 193.
22
Listing Proposal at 1071.

5
been accompanied by longer “melt seasons”; most dramatically, in 2005, the melt season arrived

approximately 17 days earlier than usual.23 About half of existing climate models predict that

Arctic summers will be virtually ice-free by 2100.24 Other researchers have predicted that the

Arctic will be ice-free by 2060 if warming trends follow their current path.25

The changes in sea ice affect the polar bear in many different ways. Weight loss,26 lower

reproductive rates,27 reduced survival rates for cubs,28 starvation,29 and even drowning30 are

among the consequences. To the extent, moreover, that changes in the Arctic habitat also affect

the polar bear’s prey, the polar bear will be affected, too.31

Climate change is not the only threat to the polar bear. Habitat loss and modification due

to other causes such as oil and gas development, illegal hunting, and chemical contamination are

all concerns, though some – especially hunting – vary greatly depending on the specific bear

population under discussion.32 But in terms of gauging long-term survival of the species, climate

change is the threat of greatest concern. In the words of the head of the U.S. Department of the

Interior upon announcing a proposal to list the polar bear as a threatened species under the

Endangered Species Act, “the polar bear’s habitat may literally be melting.”33

The questions are: Why should we, why do we, care? Does economics help us to

understand why we care and to decide what to do?

II. The Economics of the Polar Bear

23
Listing Proposal at 1071.
24
IPCC, Climate Change 2007: The Physical Science Basis 16 (Feb. 2007), available at http://www.ipcc.ch.
25
Listing Proposal at 1072.
26
Listing Proposal at 1072, 1073, 1076, 1080.
27
Listing Proposal at 1072, 1073, 1076, 1080.
28
Listing Proposal at 1075, 1076.
29
Listing Proposal at 1076, 1085.
30
Listing Proposal at 1076, 1077.
31
Listing Proposal at 1074-75.
32
Listing Proposal at 1081-85, 1091-94.
33
Fish and Wildlife Service, Interior Secretary Kempthorne Announces Proposal to List Polar Bears as Threatened
Under Endangered Species Act (Dec. 27, 2006), available at
http://www.doi.gov/news/06_News_Releases/061227.html.

6
 There are several possible components of the economic value of natural resources. First,

most conventionally, is the value associated with actually consuming or using the resource. If

we buy a plate of polar bear meat or a pelt of polar bear fur, we can look upon the market price

of the meat or the fur as an indicator of its economic value. Sometimes this calculation is

complicated by the fact that the resource use is not directly sold in markets. Thus, for example,

if we travel to the Arctic to observe the polar bear in its natural habitat, our plane tickets have a

market price but the animal itself does not. But by considering the price of travel, one can find at

least some signal of the animal’s economic value. Similarly, many natural resources play a role

in ecosystems that, if the resources were depleted, would have to be performed (if this is even

possible) by a manmade piece of equipment or other technology that itself has a market price.

Here, too, therefore, one might take market prices as a sign of the economic value of the

resource. This is, in simplified form, the economic component of the notion of “ecosystem

services.”34

Beyond these quite traditional, if complex, market values, many economists have also

recognized that people are willing to pay for the protection of natural resources even when they

do not use them. People are willing to pay, for example, for having the option to use a resource

in the future, to know that their descendants and future generations will have the opportunity to

use the resource, and for the simple knowledge that the resource is still here. Known in the

jargon as “option,” “bequest,” and “existence” values, these values are impossible to measure

using market behavior because no market activity is associated with them. We might care deeply

about the polar bear, for example, and yet engage in no economic transaction that expresses our

concern.

34
See, e.g., Peter Morton, The Economic Benefits of Wilderness: Theory and Practice, 76 U. DENV. L. REV. 465
(1999).

7
 In these circumstances, economists have turned to the technique of contingent

valuation.35 Contingent valuation is, essentially, an elaborate opinion poll. Survey respondents

are asked to report on the amount of money they are willing to spend to protect a particular

natural resource. Results are tallied to estimate the monetary value associated with the

resource’s non-use values. The numbers obtained in these surveys can be enormous: a famous

contingent valuation study conducted in the wake of the Exxon Valdez oil spill, for example,

concluded that as a nation we would be willing to pay as much as $9 billion to avoid the non-use

losses associated with another similar spill.36

Using these various valuation techniques as our guide, what is the polar bear worth?

Given the paucity of quantitative data on the economic value of the polar bear, I will not attempt

a precise estimate here. I will, instead, simply describe the ways in which the polar bear’s worth

could be measured in economic terms and offer quantitative figures where they are available.

A. Use Values

The market for polar bear products (meat, fur, teeth, claws, etc.) has been strictly

regulated since 1973, when the international Agreement on the Conservation of Polar Bears was

signed by the polar bear nations. This agreement generally prohibits hunting, killing, and

capturing polar bears, but makes an exception for “local people using traditional methods in the

exercise of their traditional rights.”37 In the United States, polar bears are also protected by the

Marine Mammal Protection Act, which also generally prohibits hunting, killing, and capturing

polar bears yet allows Alaska native populations to hunt polar bear for subsistence purposes or to

35
For an excellent introduction to and defense of contingent valuation, see W. Michael Hanemann, Valuing the
Environment Through Contingent Valuation, 8 J. ECON. PERSP. 19 (1994).
36
FRANK ACKERMAN & LISA HEINZERLING, PRICELESS: ON KNOWING THE PRICE OF E VERYTHING AND THE VALUE
OF NOTHING 156 (2004).
37
Agreement on the Conservation of Polar Bears, Nov. 15, 1973, 27 UST 3918, 13 ILM 13 (1974), Article III(d).

8
create and sell traditional handicraft and clothing.38 Thus, despite international and domestic

protections, the polar bear has several conventional economic uses. Some of these depend on

killing the bear; others do not.

1. Nonexistence Values

Native populations in Canada, Greenland, and the United States may hunt polar bears; in

Norway and Russia they may not.39 The native populations in Canada, Greenland, and the

United States eat polar bear meat and fat; they make polar bear pelts into items like parkas and

pants; and they use polar bear parts such as teeth and claws to make traditional handicrafts.40

Because subsistence uses of the polar bear for meat or other purposes do not entail an economic

transaction, placing a dollar value on these uses would be somewhat complicated. In theory,

certainly, one could price the value of replacement meat, for example, and thus derive a rough

estimate of the economic value of polar bear meat. (Notice, however, how complicated things

are even here: the Inuit eat polar bear meat for spiritual as well as physical sustenance; a pork

chop wouldn’t quite cut it as a substitute.) Other consumptive uses of polar bear parts do involve

economic transactions. For example, handicrafts such as jewelry may be sold to tourists in

Alaskan native villages and brought home with the tourists.41

In Canada and Greenland, native populations are permitted to sell a portion of their polar

bear harvesting quotas to non-residents.42 These rights come with a hefty price tag. Trophy

hunters pay as much as $27,500 for the privilege of participating in a polar bear hunt (no success

guaranteed).43 They, too, may bring their booty home with them. Some idea of the economic

38
16 U.S.C. 1371(b).
39
Listing Proposal at 1081-82.
40
Listing Proposal at 1081.
41
See U.S. Fish and Wildlife Service’s polar bear fact sheet at http://alaska.fws.gov/law/pdf/polarbear.pdf.
42
Listing Proposal at 1082.
43
Katherine Harding, Putting a chill on the polar bear hunt, The Globe and Mail (Canada) (Apr. 3, 2007).

9
scale of this market can be gleaned from the fact that from 2002-2005, the United States granted

252 separate requests to import polar bear trophies.44 Recent estimates indicate that trophy

hunters bring approximately $2.9 million into the economy of Nunavit, the Canadian province

that has the largest number of polar bears.45

2. Ecovoyeurism

The polar bear has economic value even when it is not dead. In the United States, the

gross economic value of live bear viewing (including the brown bear as well as the polar bear)

was estimated at $485 million in 1995.46 If anything, it appears that this value has risen in recent

years. Travel companies now offer Arctic “safaris” including “polar bear sightings (not

guaranteed),” at a cost of as much as $20,000 per person.47 Remarkably, some travel

entrepreneurs have turned climate change itself into a tourist opportunity: islands in Norway’s

Svalbard archipelago, for example, advertise themselves as places to go to witness firsthand the

already-dramatic effects of climate change on the Arctic.48

Polar bears are also zoo favorites. Knut, the polar bear cub born in late 2006 and raised

by a Berlin zookeeper after his mother rejected him, has become a worldwide phenomenon.

Shares of the company that operates the Berlin Zoo climbed over 100 percent in value in the first

months of Knut’s life.49 Some observers speculated that the Knut “brand” could be worth as

44
Listing Proposal at 1084 Table 2.
45
Harding, supra note 43.
46
Harvey Lemelin, Conservation strategies in North American bear viewing areas – A comparative analysis of
management policies in connection with bear observation activities in bear congregation, 2001 Leisure Research
Symposium, available at
http://216.239.51.104/search?q=cache:22BG3pA4RVkJ:www.ahs.uwaterloo.ca/~garls/2001abstracts/harvey.htm+po
lar+bear+viewing+%24485+million&hl=en&ct=clnk&cd=1&gl=us.
47
Advertised as the “Great Canadian Expedition,” at
http://www.hilton.com/en/hi/hotels/hotelpromo.jhtml?ctyhocn=TORHITW&promo=Great_Canadian_Expedition_P
ackage.
48
Arctic islands pitch climate tourism, Sydney Morning Herald (May 17, 2007), available at
http://www.smh.com.au/news/World/Arctic-islands-pitch-climate-tourism/2007/05/17/1178995330288.html#.
49
Andreas Hippin, Berlin Zoo Stock Jumps on “Knut” Polar Cub Brand Bets (Apr. 3, 2007), available at
http://www.bloomberg.com/apps/news?pid=20601100&sid=adjAaVeZ5wRU&refer=germany.

10
much as $13 million to the zoo.50 Knut has drawn over a million visitors.51 Lesser-known polar

bears also attract many visitors to zoos every year. As of February 2007, Polar Bears

International estimated that there were 246 polar bears in captivity at 104 different zoos around

the world.52 And Baltimore’s Magnet the polar bear won the computer game Zoo Tycoon’s

national “Beast in Show” award in 2001.53 It is hard to know, of course, exactly what the

economic value of captive and virtual polar bears says about the economic value of the polar

bear as a species, but at the least it is suggestive.

3. Ecosystem Services

Polar bears are the largest land predator in the Arctic, and indeed in the world.54 Their

status as a species affects all of the species situated below them on the ecological pyramid.

Imbalance in the polar bear population would likely create imbalance in the seal populations on

which they depend, which would create imbalance in the krill and fish populations on which the

seals depend, and so on. I am not aware of any attempt to measure the economic value of the

polar bear’s contributions to the Arctic ecosystem, and I will not make such an attempt here.

The simple point for present purposes is that the polar bear’s economic worth extends beyond the

animal itself to include the ecosystem to which it contributes.

B. Non-Use Values

I am also unaware of any economic research on the non-use value of the polar bear.

There are, however, quite a few studies attempting to elicit the non-use value of other, similarly

“charismatic” species. As noted above, these studies use the technique of contingent valuation to

50
Ibid.
51
Adam Williams, Berlin welcomes polar bear Knut’s millionth visitor (July 5, 2007), available at
http://www.reuters.com/article/lifestyleMolt/idUSL0585860220070705.
52
This calculation was based on information provided by Polar Bears International, at
http://www.polarbearsinternational.org/zoos-with-polar-bears.
53
Baltimore Bear’s Animal Magnetism Earns Stardom, Job Offer (Dec. 13, 2001), available at
http://pc.gamezone.com/news/12_13_01_10_20AM.htm.
54
Stirling at 23.

11
try to identify the value people place on species even when they do not use them. According to

such studies, the average household would be willing to pay $216 to protect bald eagles, $173 to

protect humpback whales, and $67 to protect gray wolves.55 Tallied across the whole U.S.

population, this means $23 billion for bald eagles, $18 billion for the humpbacks, and $7 billion

for the wolves.56 To put these numbers in perspective, we could observe that the total budget for

the U.S. Department of the Interior – charged with protecting not only all threatened and

endangered species, but also with managing about 500 million acres of public lands – was less

than $11 billion in 2006.57 The numbers gleaned from contingent valuation studies also show

that the non-use values associated with resources are often larger than the use values. In the case

of the Exxon Valdez spill, the $9 billion figure gathered from the contingent valuation surveys

dwarfed the $300 million in traditional economic damages claimed from the spill.58

We will return in a moment to the usefulness of contingent valuation studies in natural

resources policy. For now, it seems safe to say that a contingent valuation survey aimed at

eliciting the value of protecting the polar bear would come up with a large number, and one that

would overwhelm the conventional economic value of the polar bear as reflected in amounts

spent on eating, wearing, hunting, and viewing this animal. Yet it is not clear that any number

calculated based on a contingent valuation study would be included in a government analysis of

policies to protect the polar bear; the economic analysis of recent federal regulations aimed at

protecting fish, for example, excluded non-use values.59

C. Polar Bear Futures

55
Ackerman & Heinzerling, Priceless, at 159.
56
Ackerman & Heinzerling, Priceless, at 159.
57
Budget numbers are available at http://www.doi.gov/budget/2007/07Hilites/overview.pdf.
58
Ackerman & Heinzerling, Priceless, at 154-55.
59
Ackerman & Heinzerling, Priceless, at 172.

12
 The U.S. Fish and Wildlife Service has proposed listing the polar bear as a threatened

species under the Endangered Species Act. Although the Service finds that polar bear

populations are already under stress due to climate change, the Service does not believe that the

species is now in danger of extinction, the trigger for finding a species “endangered” rather than

threatened.60 Rather, the Service believes that the polar bear is likely to become endangered –

that is, will be in danger of extinction – “within the foreseeable future.”61 The Service defines

the “foreseeable future” for the polar bear as approximately 45 years, which is three polar bear

generations.62 “Populations would be affected differently in the rate, timing, and magnitude of

impact,” the Service has written, “but within the foreseeable future, the species is likely to

become endangered throughout all or a significant portion of its range due to changes in

habitat.”63

Guidelines for economic analysis performed by federal agencies direct the agencies to

apply a discount rate to costs and benefits that will occur in the future, on the theory that future

costs and benefits are not as valuable as costs and benefits that occur today.64 The guidelines

state that 7 percent is the preferred discount rate, but that agencies should also show the results of

analysis using a 3 percent rate.65 According to these guidelines, federal agencies charged with

protecting the polar bear would discount the benefits of protecting the bear over the interval

between now and the time when those benefits would occur – that is, the time when the bear

would otherwise perish.

60
16 U.S.C. 1532(6), (20).
61
16 U.S.C. 1532 (20).
62
Listing Proposal at 1070-71.
63
Listing Proposal at 1094.
64
OMB Circular A-4, at 32, available at http://www.whitehouse.gov/OMB/circulars/a004/a-4.pdf.
65
OMB Circular A-4, at 34.

13
 Suppose that the economic value of preserving the polar bear is calculated to be $20

billion. Discounted at OMB’s preferred 7 percent rate over 45 years, this value shrivels to less

than $1 billion in present-value terms. Even at a rate of 3 percent, the value shrinks to just over

$5 billion due to discounting. Because the polar bear is not expected to go extinct for decades,

therefore, economic analysis as currently practiced by the federal agencies would, through the

use of discounting, take a huge chunk out of whatever monetary value could be attached to the

protection of this species.

D. Conclusion

The polar bear appears to be worth very little in conventional economic terms. A small

number of individuals are willing to pay a great deal to hunt or to view the polar bear, but most

people will never use or even see one of these animals in the wild. If values similar to those

obtained through surveys concerning other popular species obtained for the polar bear, the polar

bear’s “non-use” value would be high. Yet current guidelines on economic analysis would call

for a dramatic reduction in this value through discounting. It appears, therefore, that economic

analysis would tell us that the polar bear is not worth very much. But this answer cuts against

the intuitive grain; if the polar bear doesn’t matter much to us, it is hard to make sense of the

species’ salience in public awareness of and discourse on climate change. Perhaps economics

does not tell us, after all, why we care about the polar bear? Moreover, even if economic

analysis – discounting and all – somehow produced a monetary valuation for the polar bear that

seemed commensurate with the public’s level of concern, would it be helpful in deciding what to

do about the bear? I believe the answer is no.

III. Why We Care

14
 There are several reasons why economic analysis will not give us a meaningful answer

about what natural resources, including the polar bear, are worth to us. These reasons, which I

discuss below, have to do with the “public goods” character of most natural resources; the

importance of the future in valuing natural resources; the interconnectedness of natural

resources; the possibility of irreversibilities and discontinuities in effects on natural resources;

and the moral dimension of natural resources protection.

A. Public Goods

Natural resources are classic examples of public goods, “not available for purchase in

individual portions.”66 I cannot buy the polar bear’s survival through my own behavior; even if I

spend extra money on a Prius to decrease my carbon footprint, someone else can buy a Hummer

and completely offset the effects of my actions. Even natural resources that have some

characteristics of private goods (and many do) often also bear traits that are in the nature of

public goods. If I buy timber rights to a forest, for example, certainly I can exclude others from

taking the lumber itself away from me. But by cutting down the trees, I harm the water flows,

species habitat, natural beauty, and other “goods” that are bound up in the forest along with the

timber. These are the kinds of things that are difficult to reduce to private ownership, and

difficult to protect on an individual basis.

The public goods character of natural resources poses a difficulty for economic analysis

of natural resources because economic analysis asks people, individually, what they are willing

to pay to protect a resource. If I am the rational character economic analysis assumes (and

prefers) me to be, however, I will pay nothing individually to protect a common resource, since I

have no expectation that my expenditure will do any good. Economic analysts, in fact, have long

66
Lisa Heinzerling & Frank Ackerman, Pricing the Priceless: Cost-Benefit Analysis of Environmental Protection,
150 U. PENN. L. REV. 1553, 1566 (2002).

15
asserted that rational people will not sacrifice anything, individually, to protect resources held in

common.67 Even if I am willing to spend nothing on my own to protect a common resource,

however, this does not mean that I am unwilling to spend money on a collective effort to protect

that resource. The former response might reflect nothing more than an expectation that the

expenditure will be futile. As Frank Ackerman and I have paraphrased a point by Amartya Sen,

“if your willingness to pay for a large-scale public initiative is independent of what others are

paying, then you probably have not understood the nature of the problem.”68

One might reasonably wonder, then, what economic analysts are thinking when they

design surveys aimed at eliciting individuals’ willingness to pay to protect public goods. Since

analysts also try to design these surveys, and interpret the results, by reference to standard

economic theory, one would expect them to expect that no one would pay anything, individually,

to protect a commonly held resource. But the analysts have not been deterred. The way they

have tried to skirt this problem is by formulating the questions in these surveys to mimic a

collective decision. They ask, for example, how much survey respondents would be willing to

pay in additional taxes to protect a resource.69

There is evidence, however, that survey respondents are not fooled by this gambit.

Researchers who have explored the motivation behind respondents’ answers to contingent

valuation surveys have found that people have a hard time valuing public goods in isolation from

other people, even when questions are framed in terms of collective choices. Detailed interviews

of participants in a survey designed to assess the value of an important marsh in England

67
WILLIAM F. BAXTER, PEOPLE OR PENGUINS: THE CASE FOR OPTIMAL POLLUTION 34 (1974).
68
Heinzerling & Ackerman, Pricing the Priceless, at 1567, citing Amartya Sen, The Discipline of Cost-Benefit
Analysis, 29 J. LEGAL STUD. 931, 949 (2000).
69
Hanemann at 24; see also Ty Raterman, On the Role of Preferences and Values in Public Decisions, 33 SOCIAL
THEORY & PRACTICE 251, 260 (2007) (suggesting that the way out of the dilemma posed by Sen is to ask each
respondent “what amount she would be willing to pay if she had an assurance that everyone else would pay that
amount as well”).

16
revealed that a number of participants’ answers were influenced by their sense that their own

individual monetary contribution would not protect the marsh. “[W]hat good would it be,” asked

one participant, “if I had said ‘oh yes, I’d give a thousand pounds?’ I mean, in isolation that is

absolutely no good anyway, is it?”70 Other participants expressed a desire for a truly collective

process of decision making, in which “local knowledge and local values” informed a process in

which experts also played a role.71 In another study, respondents were asked to state their

willingness to pay for policies to address climate change.72 While doing so, they were also asked

to “think aloud” about their responses to the survey questions.73 Several respondents stated that

they were unsure what their individual contribution would imply for the general problem of

climate change,74 and others stressed the importance of a collective effort: “[I]f you’re paying

you feel it has to be part of a joint effort with everyone else, it can’t just be selectively done.”75

In attempting to elicit economic values for goods not traded in markets, therefore,

contingent valuation has not solved the problem of public goods; it has merely glossed over it.

Many survey respondents have been clever enough to see the device of asking about increased

taxes for what it is: a way of pretending that public goods can be valued by individuals acting in

isolation from one another. Economic analysts, to be sure, have recently been hard at work

trying to design valuation studies that will capture the collective reflection many respondents

have been so anxious to see. But the closer contingent valuation comes to an exercise in

collective deliberation, the further it moves from the central economic tenets on which it was

70
Judy Clark, Jacquelin Burgess & Carolyn M. Harrison, “I struggled with this money business”: respondents’
perspectives on contingent valuation, 33 ECOL. ECON. 45, 50 (2000).
71
Clark at 56.
72
Henrik Svedsäter, Economic Valuation of the Environment: How Citizens Make Sense of Contingent Valuation
Questions, 79 LAND ECON. 122 (2003).
73
Svedsäter at 125.
74
Svedsäter at 129.
75
Svedsäter at 129; see also David A. Schkade & John W. Payne, How People Respond to Contingent Valuation
Questions: A Verbal Protocol Analysis of Willingness to Pay for an Environmental Regulation, 26 J. ENVTL. ECON.
& MGT. 88, 99 (1994)

17
founded. More fundamentally, once contingent valuation becomes a means for people to decide,

together, on collective means and ends, then one must seriously ask what role this technique has

to play in shaping policy. After all, collective deliberation on collective means and ends lies at

the heart of our government structure. Yet a major consequence of cost-benefit analysis has been

to upend the legislative products of that structure, to question the goals laws set by reference to

individuals’ supposed preferences. But if the direction of contingent valuation is to make the

technique look like a public referendum, why not skip contingent valuation and have the

referendum? Or why not skip contingent valuation and respect the laws in place?

Weirdly, instead of asking the question this way, some researchers have suggested that

perhaps a “democratically legitimized” dialogue should precede contingent valuation, so as to

make more likely the production of “well-founded estimates of WTP.”76 This strikes me as just

exactly backwards. Democratic deliberation is not a tool that serves WTP; WTP is a tool that (in

theory) serves democratic deliberation.

In any event, the public-goods character of many natural resources (including the polar

bear as a species) means that accounts of how much individuals are willing to spend, as

individuals, to protect these resources will reveal little about the resources’ real worth. Cost-

benefit analysis using such accounts will give us bad information.

B. The Future

One of the central struggles in natural resources policy has been between those who

favor short-term exploitation of natural resources and those who favor long-term preservation of

them. The trouble with cost-benefit analysis in this context is that it inherently, but almost

invisibly, favors the former perspective. Discounting – universally favored among cost-benefit

analysts – makes protection of natural resources into the far future seem like a bad idea. Yet
76
Svedsäter at 134.

18
discounting is also a quite arcane methodology, difficult for a layperson to understand or even to

discern in operation. Thus, cost-benefit analysis with discounting could undo the case for long-

term preservation of natural resources, without most people even understanding why.

This result would be directly contrary to a central thrust of U.S. natural resources law.

Every major modern U.S. law on natural resources is written with an eye on the far future. None

of these laws dictates the short-term exploitation of natural resources at the expense of long-term

protection. To be sure, in operation, these laws have often condoned, if not encouraged, short-

term destructive use. But their aspirations are mostly to the contrary.

Consider, for example, the Endangered Species Act, under which the polar bear may soon

be protected. This law does not require protection for listed species for just a little while, or for

as long as seems convenient. Rather, it contemplates, and seeks to ensure, the continued

existence of species into the indefinite future.77 This is a law built for the long haul. By

trivializing the benefits of protecting species into the far future, discounting mocks the very

premises of the Endangered Species Act.

The same is true of numerous other modern natural resource laws. The laws protecting

national parks,78 national monuments,79 and wilderness areas80 likewise aspire to long-term

protection of natural resources. Even other, less overtly preservationist laws at least take long-

term protection as a central theme. The Multiple Use-Sustained Yield Act of 1960, for example,

77
See, e.g., 16 U.S.C. § 1531(b) (declaring purpose of statute to be conservation of species and ecosystems on
which they depend, without any temporal qualification).
78
See, e.g., National Park Service Organic Act, 16 U.S.C. § 1 (purpose of national parks, monuments, and
reservations “is to conserve the scenery and the natural and historic objects and the wild life therein and to provide
for the enjoyment of the same in such manner and by such means as will leave them unimpaired for the enjoyment
of future generations”).
79
Antiquities Act of 1906, 16 U.S.C. § 431 (providing for “proper care and management” – without temporal limit –
of designated “historic landmarks, historic and prehistoric structures, and other objects of historic or scientific
interest” situated on the public lands).
80
Wilderness Act of 1964, 16 U.S.C. § 1131(a) (“it is hereby declared to be the policy of the Congress to secure for
the American people of present and future generations the benefits of an enduring resources of wilderness”).

19
aims to protect sustainability of the forest resource into the indefinite future.81 The Federal Land

Policy and Management Act has a similar goal for other public lands.82 Examples could be

multiplied. The basic point is this: modern U.S. laws on natural resources were written in the

hope of protecting these resources, not just for our generation, but for many generations to come.

They do not have an expiration date, a date on which protection of natural resources becomes

undesirable.

Discounting is inconsistent with this forward-looking purpose. It puts a large (probably

crushing) thumb on the scales in favor of short-term exploitation and against long-term

preservation. Cost-benefit analysis using the technique of discounting – and all cost-benefit

analyses undertaken by the federal government currently use this technique – will systematically

undercut the case for long-term protection of natural resources. Perhaps equally bad, it will do

so underhandedly, in a way only experts (or very motivated and numerate laypeople) can

understand.

C. Interconnectedness

Economic analysis tries very hard to isolate the particular commodities it is aiming to

value and to ensure that the value of these commodities is not entangled, in the valuing group’s

mind, with other commodities. Thus, to take the polar bear again as our example, economic

analysts trying to figure out what the polar bear is worth would work hard to make sure that their

estimates did not include values for ringed seals, krill, or the Arctic itself. A significant part of

81
16 U.S.C. § 529 (forest resources to be developed for purpose of achieving “multiple use and sustained yield”); id.
§ 531(b) (“sustained yield” is “the achievement and maintenance in perpetuity of a high-level annual or regular
periodic output of the various renewable resources of the national forests without impairment of the productivity of
the land”).
82
43 U.S.C. § 1743(b) (Secretary of the Interior directed to manage public lands so as “to prevent unnecessary or
undue degradation of the lands”).

20
the literature on contingent valuation, in fact, has focused on ways to avoid this kind of

misestimation – or, in the view of economic analysts, overestimation.

But the polar bear eats the ringed seal, the ringed seal eats krill, and all depend on a stable

Arctic environment for their survival. At the same time, “the Arctic” as we have come to know

it includes, as central constituents, the polar bear, the seals, and the ice that is melting under their

feet. Economic analysis does not work well without reductionism – practitioners of contingent

valuation serve constant reminders that valuation questions must be precise, targeted, and

limited, in order to work tolerably well – but the reductionism it insists upon does not exist in the

real world. You cannot have the polar bear without the Arctic, and you cannot have the Arctic

without the polar bear. Thus asking questions about how much the polar bear, in isolation, is

worth is an unrealistic, and possibly meaningless, exercise. As Aldo Leopold famously put a

similar idea: “Everybody knows . . . that the autumn landscape in the north woods is the land,

plus a red maple, plus a ruffed grouse. In terms of conventional physics, the grouse represents

only a millionth of either the mass or the energy of an acre. Yet subtract the grouse and the

whole thing is dead.”83

Many respondents in contingent valuation surveys understand this point, just as they

understand the concept of public goods. Some respondents recognize that nature cannot be

separated into discrete chunks, with each valued as if it were not part of a greater whole.84

Similarly, they understand that the specific resource being valued is often just one, “inseparable

part” of a larger environmental issue.85 To state it another way: “Butterfly species in the

Amazon are becoming extinct because of the loss of habitat. The only way to save one species is

83
ALDO LEOPOLD, A SAND COUNTY ALMANAC 146 (Oxford Press 1966 ed.).
84
N. A. Powe et al., Mixing methods within stated preference environmental valuation: choice experiments and
post-questionnaire qualitative analysis, 52 ECOL. ECON. 513, 517 (2005).
85
Svedsäter at 125.

21
to save them by saving the forest as well.”86 The idea makes a good deal of sense, yet contingent

valuation surveys continue to strive to isolate the specific resource of concern from its larger

context. This cannot help but befuddle numerous respondents, and to lead to strangely

acontextual estimates of value.

D. Irreversibilities and Discontinuities

Economic analysis is designed to evaluate problems at the margins, to discern the effect

of rather small changes in outcomes on the prices of various commodities. Relatedly, economic

analysis is also tailored to stable problems, with predictable signs and magnitudes. Neither of

these features of economic analysis makes it well suited to natural resources policy.

Consider, again, the Endangered Species Act. The goal of the law is to ensure that

species do not become extinct. Extinction is not a problem at the margin. Figuring out what

preventing the extinction of a species is worth to us is not a matter of deciding what one more

polar bear, or ten more, or 100 more, are worth to us. It is a matter of deciding what avoiding a

world entirely devoid of polar bears is worth to us. Particularly coupled with discounting,

economic analysis is not a good way of making this kind of decision. Discounting, like

economic analysis more generally, assumes stable problems. Irreversibilities and discontinuities

are inconsistent with this comfortable mindset.

One way to appreciate how little economic analysis has to say about irreversible and/or

discontinuous calamities is to examine the way it goes about valuing human lives. Economists

have long conceded that it is not possible to place an economic value on certain death. If asked

what they would pay to avoid certain death, most individuals would pay whatever they had; in

that case, “willingness to pay” would measure only ability to pay and would be a poor reflection

86
Arild Vatn, Environmental Valuation and Rationality, 80 LAND ECON. 1, 6 (2004), quoting W. Schulze et al.,
Methodological Issues in Using Contingent Valuation to Measure Non-Use Values, EPA/DOE Workshop Paper,
Herndon, VA (1994).

22
of true value. If asked what they would accept to allow certain death most individuals would be

unlikely to make a deal, opting instead to go on living; in that case, economic analysis would

come up with no useable number at all. For these reasons, economists long ago turned to the

device of “statistical lives” to measure the value of human life. A statistical life is a collection of

small risks in a population such that, when totaled together, they will result in one death; for

example, one million risks of 1 in 1 million add up to one statistical life (or death). The fact that

economists have resorted to this contrivance – which ends up measuring the value only of risk,

not of life – is one important indication that economic analysis does not work well when it comes

to irreversible and discontinuous events, like death.

Certainly, not all natural resource problems present issues of irreversibility and

discontinuity. But many do; they include, among others, the extinction of species, the

destruction of original wilderness, and the contamination of land and other resources with

persistent and, for all purposes, permanent toxins. In these cases, which are numerous, economic

analysis will fall short in valuing the resources at stake.

This problem is more than technical. It is not just that economic analysis, as presently

constituted, has a hard time dealing with irreversibilities and discontinuities. It is also that,

particularly with respect to irreversibilities, a thoroughly non-economic perspective comes into

play in this context. Consider this passage from Peter Matthiessen’s Wildlife in America:

The finality of extinction is awesome, and not unrelated to the finality of eternity. Man,
striving to imagine what might lie beyond the long light years of stars, beyond the
universe, beyond the void, feels lost in space; confronted with the death of species,
enacted on earth so many times before he came, and certain to continue when his own
breed is gone, he is forced to face another void, and feels alone in time.87

87
PETER MATTHIESSEN, WILDLIFE IN AMERICA 22 (Viking Press 1959).

23
Profound anxieties and longings come to the fore when one contemplates the prospect of

irreversible loss. These anxieties and longings are not well reflected – nor even much respected

– in economic analysis.

E. Morality

The moral dimension of natural resources protection is complex and subtle, ranging from

beliefs in the rights of other living things not to suffer at our hands to metaphysical questions

about humans’ place in the universe. I cannot hope to describe all of its intricacies here. What I

hope to do, however, is to show that economic analysis slights this moral dimension and thus

fails to grasp a large part of the reason why we protect natural resources in the first place.

The part of natural resource valuation that has the best hope of capturing its moral

dimension is contingent valuation. It is hard to see how market values – the price we might pay

for polar bear trinkets, say, or the airline fare required for a visit to polar bear habitat – reveal

any kind of moral stance. To be sure, we might value the trinket or the visit partly because of the

reverence we feel for the species, and reverence – a close cousin of the humility borne of an

appreciation of our own small place in the universe – has a moral dimension. But the market

cost of the symbols of our reverence must pale in comparison to the worth of the object of our

reverence. To say otherwise would be like saying that the price of rosary beads signals the value

of Catholicism to their owner. The moral dimension of natural resource valuation is captured, I

think, not so much in the ways we use or consume natural resources – which can be reflected in

market exchanges – but more in the ways we do not use them. This is where contingent

valuation comes in. As we have seen, it is the only method for identifying non-use values.

Yet even here, economic analysis falls short. Respondents in contingent valuation

surveys frequently express moral qualms about “buying” or “selling” natural resources, and these

24
qualms confound the results of the surveys. Some respondents express moral outrage by stating

an exceptionally high willingness to pay for natural resource protection. Others, interestingly,

express the same kind of sentiment by refusing to pay anything at all.88 Either way, the

estimation of economic value is unsettled by the presence of respondents who recoil at the very

prospect of monetary valuation in this setting.89

Some scholars have argued that the injection of moral impulses into responses to

contingent valuation surveys renders the whole enterprise meaningless from an economic

perspective. They believe that respondents giving voice to such impulses are “purchasing,” not a

public good, but “moral satisfaction,” and that “[t]he amount that individuals are willing to pay

to acquire moral satisfaction should not be mistaken for a measure of the economic value of

public goods.”90 Or, put another way, existence values should be used in economic analysis only

if “people’s individual existence values … reflect only their own personal economic motives and

not altruistic motives, or sense of duty, or moral obligation.”91 As Michael Hanemann has

trenchantly observed, however, “[t]his criticism hardly comports with the standard view in

economics that decisions about what people value should be left up to them…. When estimating

demand functions for fish prior to Vatican II, no economist ever proposed removing Catholics

because they were eating fish out of a sense of duty. Nor, when estimating collective choice

models, do we exclude childless couples who vote for school bonds because they lack a personal

economic motive.”92

88
Thomas H. Stevens et al., Measuring the Existence Value of Wildlife: What Do CVM Estimates Really Show?, 67
LAND ECON. 390, 397 (1991).
89
Id. at 399; Clark at 60.
90
Daniel Kahneman & Jack L. Knetsch, Valuing Public Goods: The Purchase of Moral Satisfaction, 22 J. ENVTL.
ECON. & MGT. 57, 69 (1992).
91
Paul Milgrom, Is Sympathy an Economic Value? Philosophy, Economics, and the Contingent Valuation Method,
in CONTINGENT VALUATION: A CRITICAL ASSESSMENT at 431 (J.A. Hausman ed., 1993).
92
Hanemann at 33.

25
 Hanemann’s critique seems to me on target as far as it goes. Indeed, it strikes me as

nothing short of bizarre that in a world where economists would most certainly include the sale

of Chanel’s $260,000 handbag93 in a calculation of gross domestic product – without any

question whether a hunger for status through conspicuous consumption reflects “a measure of the

economic value” of the handbag – moral values would be barred from admission into the

economic sphere. Yet I think Hanemann does not go far enough. Contingent valuation simply

cannot process individuals’ unwillingness to put nature up for sale. If individuals feel very

strongly about protecting natural resources, at some point their willingness to pay will be

bounded by their ability to pay, and “willingness to pay” will reflect only ability to pay. Or, as

noted above, individuals who feel very strongly might refuse to participate in the economic

valuation at all, reporting an answer of “zero” that completely misrepresents the true worth of the

resource to them.

Worse still, economic valuation itself compounds the moral uneasiness associated with

depletion or destruction of natural resources. When we give a price at which we would be

willing to “sell” the polar bear, or we say that we are unwilling to pay above a certain price to

“buy” the protection of the bear, we become complicit in the species’ demise. Economic

valuation is not a way out of the moral dilemmas surrounding natural resource protection; it is a

way of creating new ones.

Conclusion

Cost-benefit analysis has not yet steamed through natural resources policy the way it has

through the policy of pollution control. Given its popularity in the latter context, however, it is

worthwhile to consider whether it would be a good idea to extend the use of cost-benefit analysis

to natural resources law and policy. I have argued that this would not be a good idea. Using the
93
I am not making this up. See Ylan Q. Mui, Exclusive Statute: It’s in the Bag, Wash. Post, at D1 (Aug. 21, 2007).

26
polar bear as my example, I have shown that the conventional economic value of a species the

public appears to regard as extremely valuable is probably quite low. Moreover, even if the

value derived from economic analysis were high, economic analysis would miss many of the

reasons why we might care about the polar bear and thus would provide a poor reflection of true

value. Public goods, the future, natural interconnectedness, irreversible and discontinuous

events, and the moral dimension are all poorly captured, if at all, by economic analysis. Yet

these characteristics and consequences lie at the heart of the resource protection mission. Cost-

benefit analysis captures the small things tolerably well but misses the large ones. The picture it

gives of value is distorted, and we are better off – and have better information – without it.

27